SCHIP and Crowd Out

The big health care debate this past week (and it could extend through September) is the re-authorization of SCHIP (State Children Health Insurance Program). SCHIP is a public program that insures poor children. It was initially authorized in 1997 with a 10 year mandate expiring September 30, 2007. Almost all experts, and most politicians, state that SCHIP has been a success. Few would advocate (at least on record) for the dismantling of SCHIP, however, the debate is complicated because the Senate and House versions of the re-authorization call for an expansion of SCHIP to insure “wealthier” children. Some states are calling for universal coverage of children. This expansion is the point of contention. President Bush does not want families to drop private insurance coverage for SCHIP coverage – a phenomenon called “crowd out.” Bush has threatened to veto any bill with expansions putting the entire SCHIP program on the line (over 6 million children).

SCHIP is complicated in its structure and the policy implications are complex. Too much for the casual reader of this blog. If you want more in depth information try here.. Also, Paul Krugman of the New York Times wrote a good Op-Ed piece on SCHIP. It cuts to the core of the issue without overwhelming one with details. You will need to be a Times Select member to access it here.

My question is this. What is more important – the coverage of over 6 million children (predominately poverty stricken) or the fear that a few less poor children might drop off the private rolls and fall onto the public rolls? This question should be the question that lawmakers ask. I’m afraid though that they are asking an ideological question. Small government versus large government? Public health coverage versus private health coverage?


8 responses to “SCHIP and Crowd Out

  1. Okay, so I am thrilled about this. Educate me!!! I have called insurance (of all types) a “dirty racket” for years and Brent’s answer is always, yeah well we better have it or else. So, fine. Mr. “always be prepared” former Boy Scout has a point, but I still feel that the whole thing is rotten (which to be fair Brent concedes).

  2. Glad to see you blogging on this, Lucas. I’ve always been interested to hear more in-depth thoughts from you about health care policy but somehow it’s never great cocktail conversation!

  3. My problem with this issue is that I cannot see that there should ever be a question about which children are entitled to health care. There’s an article in the Times today about the latest census and there are now 47 million Americans without insurance, 8.7 million of them being children. I imagine some of these “wealthier” children, along with their “wealthier” parents, are among those who remain uninsured.

  4. I just read the press release from the US Census Bureau which states, among other details, that 47 million (15.8%) of the national pop. is without health insurance. I consider myself blessed and fortunate, if not just lucky, that I have health insurance. If my husband lost his job, I would likely join that number as I have serious pre-existing conditions that would make me an undesireable new customer and my husband as well. But as long as I have insurance and can maintain my health (I need some expensive medication) I can work and be a productive, contributing member of society. To not have insurance, means not taking the medicine that keeps me working and contributing. I wonder how many people who are without insurance, could be more productive as members of the larger community if they had the opportunity to receive the health care needed. I wonder how many more children would become more productive, contributing members of society if they had better health care. For example, if asthma were controlled for a child, perhaps his/her school attendance would improve and his ability to concentrate and learn as well.

  5. Casey, I agree that the debate today does not go far enough. All children should have health insurance. For that matter all people should have health insurance. It doesn’t make sense to have healthy children taking care of sick parents who can’t afford the care they need. However, it is exactly the threat of universal health care for children that has brought on the veto threat. What would happen if there was an effective government-run universal health care program for both children and the elderly? In coming entries I plan to discuss universal health care in much more depth.

  6. Under what circumstances would/could parents drop private insurance to be on the SCHIP type plans? What would the benefit be to the parent? Is there evidence that that has happened in any number to date?

  7. DGP,

    Under federal SCHIP regulations it states that children must be uninsured to be eligible for SCHIP benefits. Many states have adopted waiting periods (38 states) with the waiting period being as short as 3 months and as long as 6 months. The administration wants to enact a 12-month waiting period. The rates of crowd out for those under 200% of the poverty level are low (24% of those who have private insurance switch. There are very few people at this poverty level who have private insurance). At the 300% level of poverty the crowd effect is near 50%. However, the percent of those who are eligible for SCHIP but are not enrolled is close to 67%, and these numbers drop for the poorer children as eligibility is raised to the higher income levels. Meaning by raising the levels you have an added benefit of enrolling a greater benefit of eligible children. So, yes, crowd out is a real phenomenon, but in my view a minor issue.

  8. hey!
    i want to say that the people witout the insurance can give the society more . but i think that the matter has become old . nothing to say now.

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